Frances Marshall, in The Success Book, Vol. 2, n.d. (c. 1975), p. 367, and also in The Magic Dealer, Vol. 2 No. 5, credits Jack Strothers as the first to cut and sell sponge rubber in the form of little rabbits.
In Magic Manuscript, Vol. 8 No. 2, Sept./Oct. 1986, p. 39, Charles Reynolds claims that Carlo (Sommer) invented the idea behind the Multiplying Sponge Rabbits, by marketing a trick in 1930 called “The Gopher Birds”. (See also Magicol, No. 152, Aug. 2004, p. 3.) Bob Nelson is commonly credited with the later multiplying sponge-rabbit variation, which he marketed c. June 1941 as "Peter Rabbit Goes to Town", showing himself as the creator. Coincidentally, in early 1942 Jack Strothers moved from Chicago to Columbus, Ohio, to work for Nelson.
See also Sponge Balls.